01—Abstract
Summary
Summary of the 10-K filed February 21, 2018. Cited figures are marked; the original filing is the authoritative source.
UNITED PARCEL SERVICE INC (UPS) filed its 2017 10-K on February 20, 2018.
The company reported significant revenue growth of 8.2% to $65.87 billiona, driven by strong performance across all segments: U.S. Domestic Package, International Package, and Supply Chain & Freight. Net income increased substantially by 43.1% to $4.91 billion, with diluted earnings per share rising to $5.61. This strong financial performance was bolstered by a considerable reduction in pension mark-to-market charges and strategic investments in network expansion and service enhancements.
UPS highlighted increased capital expenditures to support demand, including investments in automated facilities and its air network capacity. The company's strategy focuses on providing integrated logistics solutions and expanding its global reach through strategic acquisitions and joint ventures, such as the significant joint venture with SF Express in China and acquisitions in the European market.
UPS also continues to invest in technology to improve operational efficiency and customer experience. The report also noted a 10% increase in the quarterly dividend to $0.91b per share, along with ongoing share repurchase programs, signaling a commitment to returning value to shareholders.
02—Key points
Key Highlights
- Total revenue increased by 8.2% to $65.87 billion in 2017.
- Net income saw a significant increase of 43.1% to $4.91 billion.
- Diluted earnings per share grew by 45.0% to $5.61.
- Average daily package volume increased by 4.9%, indicating strong demand.
- Operating profit increased by 37.7% to $7.53 billion, partly due to a $1.85 billion reduction in pension mark-to-market charges.
- UPS continued to invest in growth, announcing significant capital expenditures and strategic acquisitions in key markets like China and Europe.
- The company increased its quarterly dividend by 10% to $0.91 per share.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 21, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $65.87B$60.91B | +8.2% |
| Operating Expenses | $59.06B$53.92B | +9.5% |
| Operating Income | $7.53B$7.69B | −2.1% |
| Interest Expense | $453.00M$381.00M | +18.9% |
| Net Income | $4.91B$3.42B | +43.3% |
| EPS (Basic) | $5.63$3.88 | +45.1% |
| EPS (Diluted) | $5.61$3.86 | +45.3% |
| Shares Outstanding (Basic) | 871.00M883.00M | −1.4% |
| Shares Outstanding (Diluted) | 875.00M887.00M | −1.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of UPS's revenue growth in 2017?
UPS's revenue growth in 2017 was driven by a combination of factors including shipment volume growth across all operating segments, yield expansion (revenue per piece), and the benefits realized from strategic investments in network expansion and service portfolio initiatives.
How did the company's pension expenses affect its financial results in 2017?
In 2017, UPS recognized pre-tax mark-to-market losses of $800 million related to its pension and postretirement defined benefit plans. However, the company's overall operating profit and net income were positively impacted by a significant reduction in these charges compared to the previous year, contributing to the substantial year-over-year increase in profitability.
What is UPS's strategy for international growth?
UPS's international growth strategy involves expanding its integrated global network and service portfolio. This includes forming joint ventures, such as the one with SF Express in China, acquiring companies in key European markets like Ireland and the UK, and investing in infrastructure to reduce transit times and improve services in high-growth regions like Asia.
How is UPS returning value to its shareholders?
UPS is returning value to shareholders through a combination of increased dividends and share repurchases. The company announced a 10% increase in its quarterly dividend to $0.91 per share and continued to execute its share repurchase program, with plans to repurchase approximately $1.0 billion of shares in 2018.
06—Continue